Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Separation Agreement and Release
On May 6, 2022, Cedar Realty Trust, Inc. (the "Company" or "CDR") entered into a
separation agreement and release (the "Release") with Robin McBride Zeigler,
Senior Executive Vice President and Chief Operating Officer of the Company,
pursuant to which Ms. Zeigler resigned from her position with the Company
effective as of May 6, 2022. Pursuant to the terms of the Release, Ms. Zeigler
will retain any vested shares of restricted Company stock and any vested
securities and cash held in the Company's 2005 Deferred Compensation Plan (the
"Plan") but will not otherwise be entitled to any compensation, severance or
bonus after the effective date of her resignation, except for premiums for
health insurance under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, for up to 12 months following Ms. Zeigler's resignation.
Ms. Zeigler will also forfeit her unvested equity awards under the Company's
equity incentive plans, as well as the right to any tax gross-up or other
tax-related payments from the Company applicable to her vested assets in the
Plan.
Consulting Agreement
Concurrently with the execution of the Release, the Company entered into a
consulting agreement with an entity controlled by Ms. Zeigler (the
"Consultant"), pursuant to which the Consultant will assist the Company with
respect to certain matters relating to the Company's existing joint venture for
the construction of an approximately 258,000 square foot six-story commercial
building in Washington, D.C. In addition, the Consultant, with and on behalf of
the Company, will work to advance the planned redevelopment of two existing
Company shopping centers (collectively, "Northeast Heights"). The consulting
agreement provides for an up-front payment from the Company to the Consultant of
$3.0 million, in addition to a payment of $750,000 upon the earlier of
completion of the sale of Northeast Heights to one or more third parties, or the
second anniversary of the agreement.
The foregoing description of the Release does not purport to be complete and is
qualified in its entirety by reference to the full text of the Release, which is
filed as Exhibit 10.1 hereto and incorporated herein by reference.
Transaction Bonus to Gregg Gonsalves
On May 6, 2022, the compensation committee of the Board of Directors (the
"Board") of the Company unanimously approved a transaction bonus in the amount
of $100,000 for Gregg Gonsalves, to be paid contingent upon the closing of the
Company's previously announced asset-sale and merger transactions, in
recognition of Mr. Gonsalves' exceptional efforts as Chairman of the Board.
Item 8.01 Other Events.
Update on Transaction Litigation
As previously reported, on March 2, 2022 the Company entered into definitive
agreements for the sale of the Company and all of its assets in a series of
related all-cash transactions (the "Transactions"). On April 5, 2022, a
purported stockholder of the Company filed a complaint against the Company and
the Board in the United States District Court for the Eastern District of New
York, entitled Stein v. Cedar Realty Trust, Inc. et. al., Civil Action No.
22-cv-1944. On April 6, 2022, another purported stockholder of the Company filed
a complaint against the Company and the Board in the United States District
Court for the Eastern District of New York, entitled Wang v. Cedar Realty Trust,
Inc. et. al., Civil Action No. 22-cv-1975. On April 18, 2022, another purported
stockholder of the Company filed a complaint against the Company and the Board
in the United States District Court for the Eastern District of New York,
entitled Whitfield v. Cedar Realty Trust, Inc. et. al., Civil Action No.
22-cv-02204. Also on April 18, 2022, a purported stockholder filed a complaint
against the Company and the Board in the United States District Court for the
Eastern District of Pennsylvania, entitled Waterman v. Cedar Realty Trust, Inc.
et. al., Civil Action No. 22-cv-01489. On April 22, 2022, a purported
stockholder filed a complaint against the Company and the Board in the United
States District Court for the Eastern District of Pennsylvania, entitled
Thornburgh v. Cedar Realty Trust, Inc. et. al., Civil Action No. 22-cv-02304. In
each action, the complaint alleges violations of Sections 14(a) and 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") in connection
with the proposed Transactions. The complaints generally allege that the
preliminary proxy statement on Schedule 14A filed by the Company with the
Securities and Exchange Commission (the "SEC") on April 5, 2022 omits material
information regarding financial projections, the financial analysis conducted by
JLL Securities in connection with its fairness opinion, conflicts of interest on
behalf of JLL Securities and BofA Securities, and the terms of BofA Securities'
engagement. The complaints seek, among other things, an injunction preventing
the consummation of the Transactions, or, in the event the Transactions are
consummated, to recover damages resulting from defendants' alleged violations of
the Exchange Act.
On April 8, 2022, several purported holders of the Company's outstanding
preferred stock filed a putative class action complaint against the Company, the
Board, and Wheeler Real Estate Investment Trust, Inc. ("Wheeler") in Montgomery
County Circuit Court, Maryland, entitled Sydney, et al. v. Cedar Realty Trust,
Inc., et al., Case No. C-15-CV-22-00152. On May 6, 2022, plaintiffs in the
Sydney action filed an amended complaint. The amended complaint alleges on
behalf of a putative class of holders of the Company's preferred stock, among
other things, against the Company and the Board, claims for breach of contract
with respect to the articles supplementary governing the terms of the Company's
preferred stock and breach of fiduciary duty, and, against Wheeler, tortious
interference and aiding and abetting breach of fiduciary duty. On May, 6, 2022,
a purported holder of the Company's outstanding preferred stock filed a putative
class action complaint against the Company and the Board in the United States
District Court for the District of Maryland, entitled Kim v. Cedar Realty Trust,
Inc., et al., Civil Action No. 22-cv-01103. The complaint alleges on behalf of a
putative class of holders of the Company's preferred stock, among other things,
claims for declaratory and injunctive relief with respect to the articles
supplementary governing the terms of the Company's preferred stock and breach of
fiduciary duty. Both the Sydney and Kim complaints seeks, among other things,
(i) a declaration that holders of the Company's preferred stock are entitled to
exercise either their conversion rights or liquidation rights as set forth in
the article supplementary, (ii) compensatory damages, and (iii) an injunction
enjoining the distribution to the Company's common shareholders of the proceeds
of any of the Transactions pending a determination of the merits of plaintiff's
claims. In addition, the Sydney complaint seeks an injunction enjoining the
merger with Wheeler. Also on May 6, 2022, the plaintiffs in Sydney filed a
motion for a preliminary injunction to temporarily enjoin the merger with
Wheeler and the distribution to the Company's common shareholders of the
proceeds of any of the Transactions until their claims have been fully
adjudicated on the merits, and have asked the court for a hearing on this motion
in advance of the stockholder vote on May 27, 2022. If the court grants the
plaintiffs' motion for a preliminary injunction, that ruling could result in a
delay of the distribution of the proceeds from the Transactions.
The Company believes that the respective allegations asserted against the
Company and other defendants in the lawsuits described above are without merit.
Similar lawsuits may be filed in the future in connection with the proposed
Transactions.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
10.1 Separation Agreement and Release, by and between Robin McBride Zeigler
and Cedar Realty Trust, Inc., dated as of May 6, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities or constitute a solicitation of any vote or
approval.
In connection with the proposed Transactions, CDR has filed with the SEC a
definitive proxy statement on Schedule 14A. Investors and stockholders of CDR
are urged to read the proxy statement (including any amendments and supplements
thereto) relating to the proposed Transactions carefully when they become
available. Stockholders will be able to obtain free copies of the proxy
statement and other documents containing important information about CDR once
these documents are filed with the SEC, through the website maintained by the
SEC at http://www.sec.gov or free of charge from CDR by directing a request to
Investor Relations at (516) 944-4561.
Participants in the Solicitation
CDR and its directors and executive officers may be deemed to be participants in
the solicitation of proxies from CDR's stockholders in connection with the
proposed Transactions. Information about the directors and executive officers of
CDR is set forth in its proxy statement for its 2021 annual meeting of
stockholders on Schedule 14A filed with the SEC on April 30, 2021, and its
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which
was filed with the SEC on February 11, 2021. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
proxy statement and other relevant materials to be filed with the SEC when they
become available.
Cautionary Statement Regarding Forward-Looking Statements
The information included herein, together with other statements and information
publicly disseminated by CDR, contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. CDR intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 and include this statement for purposes of complying with these safe
harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
the Company's future plans, strategies and expectations, are generally
identifiable by use of the words "may", "will", "should", "estimates",
"projects", "anticipates", "believes", "expects", "intends", "future", and words
of similar import, or the negative thereof. Factors that could cause actual
results, performance or achievements to differ materially from current
expectations include, but are not limited to: (i) the proposed Transactions may
not be completed in a timely manner or at all, including the risk that any
required approvals, including the approval of the Company's stockholders, are
not obtained, are delayed or are subject to unanticipated conditions that could
adversely affect the Company or the expected benefits of the proposed
Transactions; (ii) the possibility that any or all of the various conditions to
the consummation of the Transactions may not be satisfied or waived; (iii) the
occurrence of any event, change or other circumstance that could give rise to
the termination of one or more of the definitive Transaction agreements,
including in circumstances which would require the Company to pay a termination
fee or other expenses; (iv) the risk that the pending shareholder litigation in
connection with the Transactions, or additional lawsuits that may be filed in
the future in connection with the Transactions, may result in significant costs
of defense, indemnification and liability; (v) the economic, political and
social impact of, and uncertainty relating to, the COVID-19 pandemic, including:
(a) the effectiveness or lack of effectiveness of governmental relief in
providing assistance to large and small businesses, particularly including our
retail tenants and other retailers, that have suffered significant declines in
revenues as a result of mandatory business shut-downs, "shelter-in-place" or
"stay-at-home" orders and social distancing practices, as well as individuals
adversely impacted by the COVID-19 pandemic, (b) the duration of any such orders
or other formal recommendations for social distancing and the speed and extent
to which revenues of our retail tenants recover following the lifting of any
such orders or recommendations, (c) the potential impact of any such events on
the obligations of the Company's tenants to make rent and other payments or
honor other commitments under existing leases, (d) the potential adverse impact
on returns from redevelopment projects, (e) to the extent we were seeking to
sell properties in the near term, significantly greater uncertainty regarding
our ability to do so at attractive prices, and (f) the broader impact of the
severe economic contraction and increase in unemployment that has occurred in
the short term and negative consequences that will occur if these trends are not
quickly reversed; (vi) the ability and willingness of the Company's tenants and
other third parties to satisfy their obligations under their respective
contractual arrangements with the Company; (vii) the loss or bankruptcy of the
Company's tenants, particularly in light of the adverse impact to the financial
health of many retailers that has occurred and continues to occur as a result of
the COVID-19 pandemic; (viii) the ability and willingness of the Company's
tenants to renew their leases with the Company upon expiration, the Company's
ability to re-lease its properties on the same or better terms in the event of
nonrenewal or in the event the Company exercises its right to replace an
existing tenant, and obligations the Company may incur in connection with the
replacement of an existing tenant, particularly, in light of the adverse impact
to the financial health of many retailers that has occurred and continues to
occur as a result of the COVID-19 pandemic, and the significant uncertainty as
to when and the conditions under which potential tenants will be able to operate
physical retail locations in future; (ix) macroeconomic conditions, such as a
disruption of or lack of access to capital markets and the adverse impact of the
recent significant decline in the Company's share price from prices prior to the
spread of the COVID-19 pandemic; (x) financing risks, such as the Company's
inability to obtain new financing or refinancing on favorable terms as the
result of market volatility or instability; (xi) increases in the Company's
borrowing costs as a result of changes in interest rates and other factors,
including the potential phasing out of LIBOR after 2021; (xii) the impact of the
Company's leverage on operating performance; (xiii) risks related to the market
for retail space generally, including reductions in consumer spending,
variability in retailer demand for leased space, adverse impact of e-commerce,
ongoing consolidation in the retail sector and changes in economic conditions
and consumer confidence; (xiv) risks endemic to real estate and the real estate
industry generally; (xv) competitive risks; (xvi) risks related to the
geographic concentration of the Company's properties in the Washington, D.C. to
Boston corridor; (xvii) damage to the Company's properties from catastrophic
weather and other natural events, and the physical effects of climate change;
(xviii) the inability of the Company to realize anticipated returns from its
redevelopment activities; (xix) uninsured losses; (xx) the Company's ability and
willingness to maintain its qualification as a REIT in light of economic,
market, legal, tax and other considerations; and (xxi) information technology
security breaches. For further discussion of factors that could materially
affect the outcome of forward-looking statements, see "Risk Factors" in Part I,
Item 1A, of the Company's Annual Report on Form 10-K for the year ended December
31, 2021 and other documents that the Company files with the SEC from time to
time.
Except for ongoing obligations to disclose material information as required by
the federal securities laws, the Company undertakes no obligation to release
publicly any revisions to any forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. All of the above factors are difficult to predict, contain
uncertainties that may materially affect the Company's actual results and may be
beyond the Company's control. New factors emerge from time to time, and it is
not possible for the Company's management to predict all such factors or to
assess the effects of each factor on the Company's business. Accordingly, there
can be no assurance that the Company's current expectations will be realized.
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